Dems: Raise royalty payments on coal sales

Sens. Ron Wyden (D-Ore.) and Tom Udall (D-N.M.) introduced a bill Wednesday to raise government revenues from the coal mined on federal land. 

The Democrats’ bill would charge royalties based on coal’s actual market value rather than the price at the first point of sale, which is the system in place today. The senators said coal companies have skirted the royalty system by selling coal cheaply to subsidiaries before going on the open market.

{mosads}A January report found the government is missing out on up to $140 million a year under the current system. 

The bill — which Wyden’s office said is based on policies in Montana — would close the loophole. It also requires the Interior Department to publish the market rate for coal and orders a study of the federal coal program every three years.

In a statement, Wyden said the bill would “get the public every penny owed by companies that may be taking advantage of a loose system.”

“Instead of subsidizing private coal companies, it’s time to put this money back where it belongs — into rural communities and the pockets of taxpayers,” he said. 

The bill comes as the Obama administration turns its focus to royalty rates for energy production on federal land. 

The Bureau of Land Management is considering hiking royalties for oil and gas drawn from federal and Indian land. Leading House Democrats have said the rate should go from 12.5 percent to 18.75 percent.

Coal represents just more than half the fossil fuels produced on federal lands, the Energy Information Administration (EIA) reported earlier this month. But coal production on federal land has also declined by 9 percent between 2012 and 2013, according to EIA.